Megaupload Founder Denied Bail Over Flight Risk

A New Zealand judge on Wednesday ordered the founder of the lucrative offshore file transfer site Megaupload.com be held in custody for another month while awaiting extradition to the U.S. on charges of racketeering, copyright infringement and money laundering.

A New Zealand judge on Wednesday ordered the founder of the lucrative offshore file transfer site Megaupload.com be held in custody for another month while awaiting possible extradition to the U.S. on charges of racketeering, copyright infringement, and money laundering.

Kim Dotcom, a 38 year-old German national also known as Kim Schmitz and Kim Tim Jim Vestor, was denied bail by Judge David McNaughton, who said the accused Internet pirate posed a "significant" flight risk, Reuters reported. Dotcom will remain in custody until Feb. 22, when he faces an extradition hearing.

Prosecutors in the U.S. claim Dotcom, a resident of both Hong Kong and New Zealand, lead a massive piracy scheme that generated more than $175 million in advertising revenue and premium memberships to Megaupload.com and other Web sites that illegally reproduced and distributed copyrighted works. That content included movies that hit Megaupload before their theatrical releases, as well as music, TV shows, e-books, and entertainment and business software.

Dotcom's lawyers, meanwhile, said they plan to appeal Wednesday's decision denying him bail and will fight the extradition. They claim his funds have been seized and he is not seeking to leave New Zealand.

The judge, however, saw things differently, noting that if he were to flee to Germany he would be safe from extradition to the U.S.

The U.S. Justice Department last week announced the takedown of Megaupload, along with charges against Dotcom and six other alleged members of the conspiracy. If convicted, those involved face up to 50 years in prison on all charges.

On Friday, authorities in New Zealand arrested Dotcom and three others following a raid of his sprawling estate carried out at the request of the FBI. Dotcom allegedly barricaded himself inside a safe room within his $30 million mansion—one of the most expensive properties in New Zealand.

According to the indictment, Megaupload used a rewards program that provided financial incentives for uploading popular content that drove traffic to the site.

"The conspirators allegedly paid users whom they specifically knew uploaded infringing content and publicized their links to users throughout the world" the DOJ said.

Angela has been a PCMag reporter since January 2012. Prior to joining the team, she worked as a reporter for SC Magazine, covering everything related to hackers and computer security. Angela has also written for The Northern Valley Suburbanite in New Jersey, The Dominion Post in West Virginia, and the Uniontown-Herald Standard in Pennsylvania. She is a graduate of West Virginia University's Perely Isaac Reed School of Journalism.
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